Flexibility in Organisations, Volberda

5/28/2018 Flexibility in Organisations, Volberda

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Building Flexible Organizationsfor Fast moving MarketsHen k W Volberda

H O W D O S T R A T E G I S T S R E C O N C IL E t h e c o n f l i c t i n g f o r -c e s f or c h a n g e a n d s t a b il it y ? H o w d o t h e y p r o m o t eo r d e r a n d c o n t r o l, w h i l e h a v i n g t o r e s p o n d , i n n o v a t ea n d l e a r n ? N o t w i t h s t a n d i n g t h e s e p r o v o c a t i v e q u e s -t i o n s , m o s t o f t h e l i te r a t u r e i n s t r a te g i c m a n a g e m e n ti s s ti l l r o o t e d i n s t a b i l i ty , n o t c h a n g e . 1 W h e n e n v i r o n -m e n t a l c h a n g e s b e c o m e i n c r e a s in g l y u n d e f i n e d , f a st -m o v i n g a n d n u m e r o u s , i t i s r i s k y t o r e l y u p o n c o n -v e n t i o n a l s t r a t e g i c m a n a g e m e n t a p p r o a c h e s . T h e r e -f o r e , s o m e r e s e a r c h e r s i n s t r a t e g i c m a n a g e m e n tc o n s i d e r e d o r g a n i z a t i o n a l f l e x i b i l i t y a s a s t r a t e g i copt ion.2-5

I n t h i s a r t i c l e w e w i l l f u r t h e r e l a b o r a t e t h e f l e x i -b i li l: y o p t i o n . W e w i l l s h o w t h a t f l e x i b i l it y i s a w a y o fi n c r e a s in g c o n t r o l i n h i g h l y t u r b u l e n t e n v i r o n m e n t s .I n t h i s a p p r o a c h f l e x i b i l i t y i s t r e a t e d a s a t w o - d i m e n -s i o n a l c o n c e p t . F i r s t , f l e x i b i l i t y i s p e r c e i v e d t o b e am a n a g e r i a l t a s k. I n t h i s c o n n e c t i o n , t h e c o n c e r n i sw i t h t h e ' c o n t ro l c a p a c i t y ' o f t h e m a n a g e m e n t .S e c o n d , f l e x i b i l i t y i s p e r c e i v e d a s a n o r g a n i z a t i o nd e s i g n t a s k . T h e c o n c e r n h e r e i s w i t h t h e ' c o n -t r o l l a b i l i ty ' o f t h e o r g a n i z a t i o n u n d e r d i f f e r e n t c o n -d i t i o n s .

O n t h e b a s i s o f t h e s e t w o d i m e n s i o n s , a r i c ht y p o l o g y o f o r g a n iz a t i o n a l f o r m s i s d e v e l o p e d , c o n -s i s ti n g o f t h e r i g id , t h e p l a n n e d , t h e f l e x i b le a n d t h ec h a o t i c m o d e . F u r t h e r m o r e , d i f f e r e n t t r a j e c t o r i e s o fo r g a n i z a t i o n a l f a i l u r e a n d s u c c e s s a r e d e r i v e d f r o mt h i s t y p o l o g y . S u b s e q u e n t l y , t h e a r t i c l e d e s c r i b e sa m e t h o d f o r d i a g n o s i n g o r g a n i z a t i o n a l f l e x i b i li t ya n d g u i d i n g t h e t r a n s i t i o n p r o c e s s , t h e F l e x i b i l i t yA u d i t R e d e s i g n ( FA R ) m e t h o d . T h e m e t h o d w a sa p p l i e d i n a n e m p i r i c a l s t u d y o f t h r e e d i f f e re n to r g a n i z a t i o n a l u n i t s o p e r a t i n g i n d i f f e r e n t, c h a n g i n ge n v i r o n m e n t s .

r o m P l a n n i n g S t r at e gi es T o w a r d slex ib i l i t y Stra teg ie sS u r p r i s i n g l y e n o u g h , i t w a s A n s o f f , 6 o n e o f th e f o u n -d e r s o f t h e p l a n n i n g a p p r o a c h i n s t ra t e g y , w h o s u g -g e s t e d th a t t h e n a t u re o f e n v i r o n m e n t a l c h a n g e w a sa l t e r in g a n d g i v i n g r is e t o s tr a t e g ic s u r p r i s e s . A c c o r d -i n g to A n s o f f , t h e p l a n n i n g c o n c e p t o f s t r a t e g y h a d t ob e r e - e x a m i n e d . T h e b a s i c e f f e c t o f u n c e r t a i n t y i s th a ti t l i m i t s t h e a b i l i t y o f t h e o r g a n i z a t i o n t o p r e - p l a n o rm a k e d e c i s i o n s a b o u t a c t i v it i e s i n a d v a n c e o f t h e ire x e c u t i o n . T h e m o r e u n c e r t a i n t h e s i tu a t i o n, t h e m o r ea n o r g a n i z a t i o n w i l l n e e d f l e x i b i l i t y a s a c o m p l e m e n t

P e r g a m o nP I I: S 0 0 2 4 - 6 3 0 1 ( 9 6 ) 0 0 1 1 0 - 0 L o n g R a n g e P l a n n i n g , V o l . 3 0 , N o . 2 , p p . 1 6 9 t o 1 8 3 , 1 9 9 7 1 9 9 7 E l s e v i e r S c i e n c e L t d . A l l r i g h t s r e s e r v e dP r i n t e d i n G r e a t B r i t a i n0 0 2 4 - 6 3 0 1 / 9 7 1 7 . 0 0 + 0 . 0 0


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t o p l a n n i n g . 4 T h e r e f o r e , A n s o f f a s s e r t e d t h a t i n t h e s es i t u a t i o n s t h e u s e o f p l a n n i n g s t r a te g i e s w o u l d b ei n c re a s in g l y s u p p l e m e n t e d a n d s o m e t i m e s r e p l a c e db y p r e p a r e d n e s s o r f l e x i b le s t ra t e g i e s.

T h i s l o o s e n i n g o f t h e p l a n n i n g s c h o o l i n s t r a te g i cm a n a g e m e n t c o n t r i b u t e d s u b s t a n t i a l l y t o t h e c o n c e p to f o r g a n i z a t i o n a l f l e x ib i l it y . O r g a n i z a t i o n a l f l e x i b i li t yi s c o n s i d e r e d a s a s t r a t e g i c o p t i o n i n s i t u a t i o n s i nw h i c h a n t i c i p a t i o n i s i m p o s s i b l e a n d s t ra t e g i c s u r -p r i s e l i k e l y .

xploring the Flexibil ity Op tionA c l e a r e r u n d e r s t a n d i n g o f t h e f le x i b i l it y o p t i o n c a nb e d e r i v e d b a s e d o n s o m e i n s ig h t s d r a w n f r o m s y s -t e m s t h e o r y o f c o n t r o l . 7 A fi rm i s u n d e r c o n t r o l w h e nf o r e a c h c o m p e t i t i v e c h a n g e t h e r e i s a c o r r e s p o n d i n gm a n a g e r i a l c a p a b i l i t y a n d f ir m r e s p o n s e . I n s t a b l ee n v i r o n m e n t s f l e x i b i l i t y i s n o t a s e r i o u s s t r a t e g i co p t i o n t o a c h i e v e c o n t r o l . A s t a b l e e n v i r o n m e n t i nw h i c h t h e r e i s i n f r e q u e n t a n d p r e d i c t a b l e c h a n g ei n c r e a s e s t h e l i k e l i h o o d t h a t t h e c r i t i c a l v a r i a b l e s c a nb e i d e n t if i e d a n d a l l o w s p l a n s t o b e d e v e l o p e d .H o w e v e r , in e x t re m e l y t u r b u l e n t e n v i r o n m e n t s i nw h i c h c h a n g e i s f r e q u e n t a n d ra d i c a l , o r g a n i z a t i o n sc h o o s i n g t h e p la n n i n g o p t i o n m a y b e c o m e e a s i lya d r i f t . A b e t t e r a l t e r n a t i v e t o a c h i e v e c o n t r o l i s t h ef l e xi b il it y o p t i o n w h i c h r e q u i r e s h i g h r e s p o n s i v e n e s s( c o n t r o l l a b i li t y ) o f t h e o r g a n i z a t i o n a n d s u f f i c i e n tm a n a g e r i a l c a p a b i l i t ie s ( c o n t r o l c a p a b i l i t y o f m a n -a g e m e n t ) . T h e f l e x i b i li t y o f a n o r g a n i z a t i o n i s t h e o u t -c o m e o f a n i n t e r a c t io n b e t w e e n 1. t h e c o n t r o l l a b i li t yo r r e s p o n s i v e n e s s o f t h e o r g a n i z a t i o n a n d 2 . t h ed y n a m i c c o n t r o l c a p a c i t y o f m a n a g e m e n t . T h i s i n te r -

a c t i o n i s s u c h t h a t e a c h m u s t b e i n b a l a n c e . T h e t w op a r ts a r e c o m p l e m e n t a r y , n o t s u b s t it u t e s . M o r e c o n -t r o l l a b i l it y d o e s n o t c o m p e n s a t e f o r l e s s c a p a c i t y .S o f l e x i b il i ty i s a f u n c t i o n o f t h e i n t e r a c t i o n o f t w o

s e t s o f v a r i a b l e s . I n t e r m s o f m a n a g e m e n t a n d o r g a n -i z a t io n , f l e x i b i li t y is a f u n c t i o n o f t h e c o n t r o l c a p a -b i l it y o f t h e m a n a g e m e n t a n d t h e c h a n g e a b i l it y o f t h eo r g a n i z a t i o n .

W e c a n s e e t h i s d u a l i t y i n t w o s e p a r a t e t a s k s ( s e eF i g u r e 1 ) . F i r s t , f l e x i b i l i t y i s p e r c e i v e d t o b e a m a n a -g e r ia l t a sk . C a n m a n a g e r s r e s p o n d a t t h e r ig h t t i m e i nt h e r ig h t w a y ? I n t h i s c o n n e c t i o n , t h e c o n c e r n i s w i t ht h e m a n a g e r i a l c a p a b i l i t i e s t h a t e n d o w t h e f i r m w i t hf l e x i b i l i t y , e . g . m a n u f a c t u r i n g f l e x i b i l i t y t o e x p a n dt h e n u m b e r o f p r o d u c t s t h e f ir m c a n p r o f i t a b l y o ff e rt o t h e m a r k e t o r i n n o v a t i o n f l e x i b i l i t y t o r e d u c e t h er e s p o n s e t i m e f o r b r i ng i n g n e w p r o d u c t s t o th em a r k e t . S e c o n d , f l e x i b i l it y is p e r c e i v e d a s a n o rg a n -i z a t i o n d e s i g n t a sk . C a n t h e o r g a n i z a t i o n r e a c t a t t h er i gh t t i m e i n t h e d i r e c t e d w a y ? T h e c o n c e r n h e r e i sw i t h t h e c o n t r o l l a b i l i t y o r c h a n g e a b i l i t y o f t h eo r g a n i z a t i o n w h i c h i n v o l v e s t h e c r e a t i o n o f t h e r ig h tc o n d i t i o n s t o fo s t e r f l e x ib i l it y . F o r i n s ta n c e , m a n u -f a c t u r i n g f l e x i b i li t y r e q u i r e s a t e c h n o l o g y w i t h m u l t i -p u r p o s e m a c h i n e r y , u n i v e r s a l e q u i p m e n t a n d a ne x t e n s i v e o p e r a t i o n a l p r o d u c t i o n r e p e r t o i r e , a I n th es a m e w a y , i n n o v a t i o n f l e x i b i l i t y r e q u i r e s a s t r u c t u r eo f m u l t i - f u n c t i o n a l t e a m s , f e w h i e r a r c h i c a l l e v e l s a n df e w p r o c e s s r e g u l a t i o n s 7

The Managerial Task Increasing theFlexibility RepertoireA s a m a n a g e m e n t t as k , f le x i b il it y is c o n c e r n e d w i t ht h e c r e a t i o n o r p r o m o t i o n o f t h e o r g a n i z a t i o n s c o n -

FiGUre ; DeV e lop ing flex ib i li ty : the mana ger ia l a nd organ iza t ion des ign ch a l lenge;Bui lding Flexible Organizat ions for Fast -moving M arkets


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Ty p e o f f l e x i b i l it ya pa c i t y f o rm a n o e u v e r I n t e rn a l E x t e r n a lRoutine I n t e r n a l o p e r a t i o n a l f l e x i b i li t yVar ia t ion o f p roduc t ion vo lumeBui ld ing up inventor iesUse of c rash team sAdap t ive

Stra teg ic

I n t e r n a l s t r u c t u r a l f l e x i b i l i t yCreat ing mul t i func t iona l teamsChanging manager ia l ro lesAl tera t ions in contro l sys tems

I n t e r n a l s t r a t e g i c f l e x i b i l i t yDisman t l ing cu r ren t s t ra tegyApp ly ing new techno log iesFundamen ta l l y renew ing p roduc ts

x t e r n a l o p e r a t i o n a l f l e x i b i li t yUse o f tempora ry labou rMu l t i sou rc ingReserv ing capac i ty wi th suppl iersx t e r n a l s t r u c t u r a l f l e x i b i l i t yPurchas ing com pone nts f rom su ppl iers wi th a shortde l ivery t ime J IT)Purchas ing subassem bl ies f rom s uppl iersco-makership)Deve lop ing subcomponen ts toge the r w i th supp l ie rsco-design)x t e r n a l s t r a t e g i c f l e x i b i l i t yCreat ing new product market combinat ionsUs ing market power to deter entry and contro lcompe t i to rsEngaging in po l it ica l ac t iv i tes to counterac t t raderegula t ions

t ro l c a p a c i t y , e s p e c i a l l y i n s i t u a ti o n s o f u n e x p e c t e dd i s t u r b a n c e . T h e m a n a g e m e n t t a s k is m a n i f e s t e d i nt h e o r g a n i z a t i o n s f l e x i b i li t y m i x . T h i s r e f e r s to t h er e p e r t o i r e o f f l e x i b i li t y i n c r e a s i n g c a p a b i l i t i e s w h i c ha n o r g a n i z a t i o n p o s s e s s e s , a n d t h e r a p i d i t y w i t hw h i c h a n o r g a n i z a t i o n c a n a c t i v a t e t h e s e c a p a b i l i t i e s .T h e f l e x i b i li t y m i x c o n s i s t s o f t h r e e t y p e s o f f l e x i b i li t y( se e; T a b l e 1 ) : o p e r a t i o n a l f l e x i b i l i t y , s t r u c t u r a l f l e x i-b i l i t y a n d s t r a te g i c f l e x i b i li t y . F o r e a c h o f t h e s e t h r e et y p e s o f f le x i b il it y a d i s ti n c t i o n c a n b e m a d e b e t w e e ni n t e r n a l a n d e x t e r n a l f l e x i b i l i t y . 3 I n t e r n a l f l e x i b i l i t yi s d e f i n e d a s m a n a g e m e n t s c a p a b i l i t y to a d a p t t o t h ed e m a n d s o f t h e e n v i r o n m e n t . E x t e r n a l f l e x i b il i ty i sd e f i n e d a s m a n a g e m e n t s c a p a b i l i t y to i n f lu e n c e t h ee n v i r o n m e n t s o t h a t th e f ir m b e c o m e s l e s s v u l n e r a b l et o e n v i r o n m e n t a l c h a n g e s .O p e r a t i o n a l f l e x i b i l i t y O p e r a t i o n a l f l e x i b i l i t yo r r o u t i n e m a n o e u v e r i n g c a p a c i t y c o n s i s t s o f r o u t i n e st h a t a r e b a s e d u p o n e x i s t i n g s t r u c t u r e s o r g o a l s o f t h eo r g a n i z a t i o n . I t i s t h e m o s t c o m m o n t y p e o f f l e x i b i li t ya n d r e l a t e s t o t h e v o l u m e o f a c t i v i t i e s r a th e r t h a n t h ek i n d s o f a c t i v i t i e s u n d e r t a k e n w i t h i n t h e o r ga n -i z a t io n . T h e s e r o u t i n e s a r e p r i m a r i l y d i r e c t e d a t t h eo p e r a t i o n a l a c t i v i t ie s a n d a r e r e a c t i v e i n n a t u r e . O p e r -a t i o n a l f l e x i b i l i t y p r o v i d e s r a p i d r e s p o n s e t o c h a n g e st h a t a r e f a m i l i a r . S u c h c h a n g e s t y p i c a l l y l e a d t o t e m -p o r a r y , s h o r t - t e r m f l u c t u a t i o n i n t h e f i rm s l e v e l o fa c t iv i ty . E v e n t h o u g h t h e v a r i e t y in t h e e n v i r o n m e n tm a y b e h i gh , t h e s o r t o f c o m b i n a t i o n s i s r e a s o n a b l yp r e d i c t a b l e s o t h a t t h e o r g a n i z a t i o n , o n t h e b a s i s o fe x p e r i e n c e a n d e x t r a p o l a t i o n , i s a b l e t o d e v e l o p c e r -t a in r o u t i n e s t o r e d u c e t h i s u n c e r t a i n t y . E x a m p l e so f i n t e r n a l o p e r a t i o n a l f l e x i b i li t y ar e t h e v a r i a t i o n o f

p r o d u c t i o n v o l u m e i n th e o r g a n i z a ti o n , t h e b u i l d i n gu p o f i n v e n t o r i e s a n d t h e m a i n t e n a n c e o f e x c e s sc a p a c i t y i n te r m s o f f i n a n c i a l r e s o u r c e s . E x t e r n a lo p e r a t i o n a l f l e x i b i l i t y c a n b e a c h i e v e d b y c o n t r a c t i n go u t o f c e r t a i n p e r i p h e r a l a c t i v i ti e s , u s i n g t e m p o r a r yl a b o u r t o a d j u s t t h e s i z e o f t h e w o r k f o r c e o r o b t a i n i n gr e s o u r c e s f r o m m o r e t h a n o n e s u p p l i e r .

S t r u c t u r a l f l e x i b i l i t y S t r u c t u r a l f l e x i b i l i t y o ra d a p t i v e m a n o e u v e r i n g c a p a c i t y r e fe r s t o t h e c a p a c i t yo f t h e m a n a g e m e n t t o a d a p t it s d e c i s io n a n d c o m -m u n i c a t i o n p r o c e s s e s w i t h i n a g i v e n s tr u c t u r e a s w e l la s th e r a p i d i t y b y w h i c h t h is c a n b e a c c o m p l i s h e d . 1W h e n f a c e d w i t h r e v o l u ti o n a r y c h a n g es , m a n a g e m e n tn e e d s g r e a t i n t e r n a l s t r u c t u r a l f l e x i b i li t y o r i n t ra o r -g a n i z a t i o n a l l e e w a y to f a c i li t a te t h e r e n e w a l o r tr a n s -f o r m a t i o n o f c u r r e n t p r o c e s s e s . E x a m p l e s o f i n t e rn a ls t r u c t u r a l f l e x i b il i ty a r e h o r i z o n t a l o r v e r t i c a l j o be n l a r g e m e n t , t h e c r e a t i o n o f s m a l l p r o d u c t i o n u n i t so r w o r k c e l ls w i t h i n a p r o d u c t i o n l in e , c h a n g e s i no r g a n i z a t i o n a l r e s p o n s i b i l i t i e s , a l t e r a t io n s i n c o n t r o ls y s t e m s , t h e u s e o f p r o j e c t te a m s a n d e v e n t h e t r a n s-f o r m a t i o n f r o m a f u n c t i o n a l g r o u p i n g t o a m a r k e t -o r i e n t e d g r o u p i n g w i t h i n t e r c h a n g e a b l e p e r s o n n e la n d e q u i p m e n t .

S t r u c t u r a l f l e x i b i l i t y c a n a l s o b e e x t e r n a l i n t e r m so f i n t e r o rg a n i z a t i o n a l l e e w a y i n s u p p o r t i n g a n d s h e l-t e ri n g n e w t e c h n o l o g i e s o r d e v e l o p i n g n e w p r o d u c t so r m a r k e t s . E x a m p l e s a r e v a r i o u s f o r m s o f j u s t - i n - ti m e(J IT ) p u r c h a s i n g , c o - m a k e r s h i p , c o - d e s i g n , e v e n j o i n tv e n t u r e s a n d o t h e r c o - a l ig n m e n t s . B y i n c r e a s in g s u c hs t r u c t u r a l r e l a t i o n s w i t h o u t s i d e r s , t h e o r g a n i z a t i o nc a n e n g a g e m o r e e a s i l y i n n e w d e v e l o p m e n t s .

Long Range Plann ing Vol. 30 April 1997


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Strategic f lexibili ty S t r a t e g i c f l e x i b i l i t y o r n o n -r o u t i n e s t e e r i n g c a p a c i t y r e f e r s t o c a p a b i l i t i e s r e l a t e dt o th e g o a l s o f t h e o r g a n i z a t i o n o r t h e e n v i r o n m e n t . 2T h i s m o s t r a d i c a l t y p e o f f l e x i b i li t y i s m u c h m o r eq u a l i t a t i v e a n d i n v o l v e s c h a n g e s i n t h e n a t u r e o fo r g a n i z a t i o n a l a c t i v i t i e s . S t r a t e g i c f l e x i b i l i t y i sn e c e s s a r y w h e n t h e o r g a n i z a ti o n f a c e s u n fa m i l i a rc h a n g e s t h a t h a v e f a r - r e a c h i n g c o n s e q u e n c e s a n dn e e d s t o r e s p o n d q u i c k l y . T h e i s s u e s a n d d i f f i c u l ti e sr e l a t i n g t o s t r a t e g i c f l e x i b i l i t y a r e b y d e f i n i t i o nu n s t r u c t u r e d a n d n o n - r o u t in e . T h e s i gn a l s a n d f ee d -b a c k r e c e i v e d f r o m th e e n v i r o n m e n t t e n d t o b ei n d i r e c t a n d o p e n t o m u l t i p l e i n t e r p r e t a t i o n s .B e c a u s e t h e o r g a n i z a t i o n u s u a l l y h a s n o s p e c i fi ce x p e r i e n c e a n d n o r o u t i n e a n s w e r t o c o p e w i t h th ec h a n g e s , m a n a g e m e n t m a y h a v e t o c h a n g e i t s g a m ep l a n s , d i s m a n t l e i ts c u r r e n t s t r a te g i e s , 11 a p p l y n e wt e c h n o l o g i e s o r f u n d a m e n t a l l y r e n e w i ts p r o d u c t s .T h e r e s p o n s e m a y a l s o b e e x t e r n a l , e . g . i n f l u e n c i n gc o n s u m e r s t h r o u g h a d v e r t i s in g a n d p r o m o t i o n s , 12c r e a ti n g n e w p r o d u c t m a r k e t c o m b i n a t i o n s , ~ u s i n gm a r k e t p o w e r to d e t e r e n tr y a n d c o n t r o l c o m p e t i t o rso r e n g a g i n g i n p o l i t i c a l a c t i v i t i e s t o c o u n t e r a c t t r a d er e g u la t io n s . N e w v a l u e s a n d n o r m s a r e n e c e s s a r y , a n dp a s t e x p e r i e n c e m a y n o t p r o v i d e a n y a d v a n ta g e . T h ec r e a t io n o f n e w a c t i vi t ie s i n n e w s i t u a ti o n s m a y b ev e r y i m p o r t a n t .Metaflexibili ty B e s i d e s t h e s e t h r e e d i f f e r e n tt y p e s o f f l e x ib i l it y , w e c a n d i s t i n g u i s h t h e m e t a -f l e x i b il i ty o f a n o r g a n i z a t i o n , i .e . i ts s u p p o r t i n g m o n i -t o r i n g o r l e a r n i n g s y s t e m . M e t a f l e x i b i l i ty i n v o l v e s t h ep r o c e s s i n g o f i n f o r m a t i o n t o f a c i l it a t e th e c o n t i n u a la d j u s t m e n t o f th e c o m p o s i t i o n o f m a n a g e m e n t sf l e x i b i li t y m i x i n l i n e w i t h c h a n g e s i n t h e e n v i r o n -m e n t . T h i s r e q u i r e s t h e c r e a t i o n , i n t e g r a t io n a n da p p l i c a t i o n o f f l e x i b i li t y i n c r e a s i n g c a p a b i l i t i e s .The O rganization Design Task: Increasing theControllabili ty of the O rganizationT h e a b i l i t y t o i n it i a t e t h e r e p e r t o i r e o f m a n a g e r i a lc a p a b i l it i e s d e p e n d s o n t h e d e s i g n a d e q u a c y o f or g an -i z a t i o n a l c o n d i t i o n s , s u c h a s t h e o r g a n i z a t i o n s t e c h -n o l o g y , s t r u c t u re a n d c u l tu r e . T h o s e c o n d i t i o n sd e t e r m i n e t h e o r g a n i z a t i o n s c o n t r o l l a b i l i t y o rr e s p o n s i v e n e s s . D e s i g n i n g t h e a p p r o p r i a t e o r g a n -i z a t i o n a l c o n d i t i o n s r e q u i r e s i d e n t i f y i n g t h e t y p e o ft e c h n o l o g i c a l , s t r u c t u r a l o r c u l t u r a l c h a n g e s n e c e s s -a r y to e n s u r e e f f e c t i v e u t i l i z a t i o n o f m a n a g e r i a l c a p a -b i l i t i es .Technology F o r m a n y s e r v i c e a n d m a n u -f a c t u ri n g o r g a n i z a ti o n s , r e c e n t d e v e l o p m e n t s i n te c h -n o l o g y h a v e c r e a t e d a ra n g e o f p r o g r a m m a b l ea u t o m a t i o n a n d g e n e r a l in f o r m a t i o n s y s t e m s t h a ts e e m t o a f f o r d m u c h g r e a t e r f l e x i b i l i ty p o t e n t i a l . 8 I nt h is c o n n e c t i o n , t e c h n o l o g y r e fe r s t o t h e h a r d w a r e( s u c h a s m a c h i n e r y a n d e q u i p m e n t ) a n d t h e s o f tw a r e

( k n o w l e d g e ) u s e d i n t h e t r a n s fo r m a t i o n o f i n p u t s i n too u t p u t s . T h e d e s i g n o f t e c h n o l o g y c a n r a n g e f r o mr o u t i n e t o n o n - r o u ti n e , c o r r e s p o n d i n g t o th e o p p o r -t u n i t i e s f o r r o u t i n e c a p a b i l i t i e s . I n th e l a s t d e c a d e ,m a n y f i r m s r e d e s i g n e d t h e i r t e c h n o l o g y i n o r d e r t oi n c r e a s e t h e i r o p e r a t i o n a l f l e x i b i l i t y . F o r i n s t a n c e ,w i t h i n P h i l ip s S e m i c o n d u c t o r s t h e i m p l e m e n t a t i o no f m u l t i - p u r p o s e m a c h i n e r y i n a la r ge b a t c h o r m a s sm o d e o f p r o d u c t i o n f a c i li t a te d t h e p o s s i b i l i t y o fi n c r e a s in g t h e a p p l i c a b i l it y o f m a c h i n e s a n d o fd e c r e a s i n g t h e s e t - u p t i m e s f o r s w i t c h i n g t o o t h e rp r o d u c t s . C o n s e q u e n t l y , e c o n o m i e s o f s c a le c o u l d b er e a c h e d w i t h i n s m a l l e r lo t s i z e s . I n a d d i t i o n , t h em o d u l a r p r o d u c t i o n c o n c e p t ga v e m a s s a n d l ar g eb a t c h m o d e s o f p r o d u c t i o n t h e o p p o r t u n i t y t o c o m -b i n e t h e s e e c o n o m i e s o f s c a l e w i t h i n c r e a s e d c h o i c e ;s t a n d a rd c o m p o n e n t s c o u l d b e p r o d u c e d i n la rg es e r ie s , w h i l e a v a ri e t y o f p r o d u c t s c o u l d b e a s s e m b l e dt h r o u g h c h a n g e s i n t h e c o n f i g u r a ti o n o f c o m p o n e n t s .Structure I n c r e a s e s i n c o n t r o l l a b i l i t y m i g h t a l s oi n v o l v e c h a n g e s i n o r g a n i z a t i o n a l structure O r g a n -i z a t i o n a l s t r u c t u r e c o m p r i s e s n o t o n l y t h e a c t u a l d i s -t r i b u ti o n o f r e s p o n s i b i l it i e s a n d a u t h o r i t y a m o n g t h eo r g a n i z a t i o n s p e r s o n n e l ( b a s ic f o r m ) , b u t a l s o th ep l a n n i n g a n d c o n t r o l s y s t e m s a n d t h e p r o c e s s r e g u -l a ti o n s o f d e c i s i o n - m a k i n g , c o o r d i n a t i o n a n de x e c u t i o n . T h e s t r u c t u r a l d e s i g n o f t h e o r g a n i z a t i o nc a n r a n g e f r o m m e c h a n i s t i c t o o r g a n i c , 13 c o r -r e s p o n d i n g t o t h e o p p o r t u n i t i e s f o r s t r u c t u r a l f l e x i-b i l it y . A f u n c t i o n a l t y p e o f o r g a n i z i n g w i t h m a n yh i e r a r c h i c a l l e v e l s i s c h a r a c t e r i s t i c o f a m e c h a n i s t i cs t r u ct u r e . P r o c e s s e s m a y b e h i g h ly r e g u l a t e d t h r o u g he l a b o r a t e p l a n n i n g a n d c o n t r o l s y s t e m s , s p e c i a l -i z a t i o n o f t a s k s a n d h i g h d e g r e e s o f f o r m a l i z a t i o n a n dc e n t r al i z a ti o n . O n l y m i n o r i n c r e m e n t a l c h a n g e s a r ep o s s i b l e i n s u c h a h i g h l y f o r m a l i z e d a n d c e n t r a l iz e ds t r u c t u r e . I n c o n t r a s t, a n o r g a n i c s t r u c t u r e c a n r a n g ef r o m t h e d i v i s i o n a l i z e d f o r m t o t h e p r o j e c t o r m a t r i xf o r m c o n s i s t i n g o f f e w h i e r a r c h i c a l l e v e l s . E s s e n t i a lf o r b o t h t h e d i v i s i o n a l a n d m a t r i x f o r m s a r e p l a n n i n ga n d c o n t r o l s y s t e m s t h a t ar e p r e d o m i n a n t l y p e r -f o r m a n c e o r i e n t e d i n s t e a d o f m e a n s o r i e n t e d a n da l l o w fo r a m b i g u o u s i n f o r m a t i o n a n d n e c e s s a r ye x p e r i m e n t a t i o n a n d i n t u i ti o n . M o r e o v e r , d i re c t p r o-c e s s r e g u l a t i o n i n t h e f o r m o f s p e c i a l i z a t i o n a n d f o r-m a l i z a t i o n i s e x tr e m e l y l o w , w h e r e a s i n d i re c t p r o c e s sr e g u l a t i o n b y tr a i n i n g a n d e d u c a t i o n i s w e l ld e v e l o p e d . S u c h o r g a n ic s t r u c t u re s p r o v i d e g r e a t le e -w a y f o r s t r u c t u r a l f l e x ib i l it y .M a n y l a rg e c o r p o r a t i o n s a r e u n d e r t a k i n g o r g a n -i z a t i o n a l r e s t r u c t u r i n g t o i n c r e a s e t h e i r r e s p o n -s i v e n e s s . F o r i n s t a n c e , X e r o x w a s a b l e t o e x p l o i t i t ss u p e r i o r t e c h n o l o g i c a l a n d m a r k e t c a p a b i l i t i e s a f t e rf u n d a m e n t a l l y c h a n g i n g t h e o r g a n i z a t i o n a l a r c h i -t e c t u r e o f t h e f i rm b y c r e a t i n g b u s i n e s s d i v i s i o n s w i t hs e l f- o r g a ni z in g t e a m s a n d d e v e l o p i n g n e w r e w a r d a n dr e c o g n i t i o n s y s t e m s .

Bui ld ing Flexible O rganizat ions for Fast -moving M arkets


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Culture N o t o n l y s t r u c t u r a l c h a n g e s , b u t a l s oc u l t u r a l c h a n g e s m a y b e n e c e s s a r y t o in c r e a s e t h ec o n t r o l l a b i l i t y o f t h e f ir m . O r g a n i z a t i o n a l c u l t u r e c a nb e d e f i n e d a s t h e s e t o f b e l i e fs a n d a s s u m p t i o n s h e l dr e l a t iv e l y c o m m o n l y t h r o u g h o u t t h e o rg a n i z a t io n a n dt a k e n f o r g r a n t e d b y i ts m e m b e r s ? 4 E s s e n t ia l f e a tu r e so f s u c h b e l i e f s a r e t h a t t h e y a r e i m p l i c i t i n t h e m i n d so f o r g a n i z a ti o n m e m b e r s a n d t o s o m e e x t e n t s h a r e d ? 5T h e b e l i e fs m a y c o n s t r a i n m a n a g e r i a l c a p a b i l it i e s b ys p e c i f y i n g b r o a d , t a c i tl y u n d e r s t o o d r u le s f o r a p p r o -p r i a t e a c t i o n in u n s p e c i f i e d c o n t i n g e n c i e s . T h e o r g a n -i z a t i o n a l c u l t u r e c a n r a n g e f r o m c o n s e r v a t i v e t oi n n o v a t i v e , d e p e n d i n g o n th e s l a c k w i t h i n t h e c u r r e n tn o r m s a n d v a l u e s y s t e m s f o r s tr a t e g ic c a p a b i l i t i e s .

T h e b e l i e f s a n d a s s u m p t i o n s o f t h e o r g a n i z a t io n a lc u l t u r e p l a y a c e n t r a l r o l e in t h e i n t e r p r e t a t i o n o fe n v i r o n m e n t a l s t i m u l i a n d t h e c o n f i g u r a t i o n o f o r g a n -i z a t i, : m a l ly r e l e v a n t s t r a t e g i c r e s p o n s e s . ~6 D o e s t h eo r g a n i z a t i o n s e e n e w s t r a t e g i c o p t i o n s ? C a n i t d e v i a t ef r o m p r e s e n t p a t t e r n s ? T h e m o r e i n n o v a t i v e t h ec u l t u r e , t h e g r e a t e r t h e l e e w a y f o r s t r a te g i c f l e x i b i l i tyw i t h i [ n t h e o r g a n i z a t i o n . H e n c e , m a n y l a r g e c o r -p o r a t i o n s s u c h a s G E , P h i l i p s a n d A B B h a v e n o t o n l yr e s t r u c t u r e d t h e o r g a n i z a t i o n , b u t a l s o t r i e d t o c h a n g et h e c o r p o r a t e c u l tu r e . A f t e r d o w n s i z i n g a n d d e l a y -e r in g t h e c o m p a n y , G E s t a r te d i t s f a m o u s w o r k o u tp r o g r a m m e , b e s t - p r a c t i c e s e s s i o n s a n d c h a n g e a c c e l -e r a t io n p r o g r a m m e . I n t h e s a m e w a y , P h i li p s C e n -t u r i o n p r o g r a m m e s t a r te d w i t h a n e f f i c ie n c y d ri v e b u tw a s f o l l o w e d b y a c u l t u r a l r e v i ta l i z in g m o d u l ei n i ti a t e d b y t h e c o n c e r n c o m m i t t e e V a l u e s a n dB e h a v i o u r ( th e P h i l i p s W a y ) . E v e n m o r e e x t r em e ,A B B d e v e l o p e d t o g e t h e r w i t h i t s gl o b a l m a t r i x s t r u c -t u r e a 2 1 - p a g e M i s s i o n , V a l u e s , a n d P o l i c y b o o k l e tr e f e r re d t o i n s i d e t h e c o m p a n y a s t h e p o l i c y b ib l e .

T y p o l o g y o f l te r n a t i ve F l e x i b leF o r m sO u r f r a m e w o r k i n F i g u r e 1 s h o w e d t h a t f o r f i rm s toe x p l o i t t h e f l e x i b i l i t y o p t i o n i n t u r b u l e n t e n v i r o n -m e n t s t h e y h a v e t o so l v e t w o c h a l le n g e s : t h e m a n -a g e m e n t c h a l l e n g e a n d t h e o r g a n i z a t i o n d e s i g nc ha l] ~e ng e. T h i s m e a n s t h a t m a n a g e m e n t h a s t o a c t i -v a t e a s u f f i c i e n t f l e x i b i l i t y m i x a n d t h e o r g a n i z a t i o nd e s i g n m u s t p r o v i d e a d e q u a t e p o t e n t i a l f o r f l e x ib i l it y .O n t h e b a s i s o f t h e t w o c e n t r a l d i m e n s i o n s o f o r g a n -i z a t i o n a l f l e x i b i l i t y - - t h e e x t e n s i v e n e s s o f t h e f le x i -b i l i t y m i x a n d t h e c o n t r o l l a b i l i t y o f t h e o r g a n i z a t i o n a lc o n d i t i o n s - - w e c a n r o u g h l y d i s ti n g u i s h f o u r i d e a lt y p e s : t h e r i g id , t h e p l a n n e d , t h e f l e x i b le a n d t h ec h a o t i c f o r m 17 ( s e e F i g u r e 2 ) . E a c h t y p e r e p r e s e n t s ap a r t i c u la r w a y o f a d d r e s s i n g e n v i r o n m e n t a l t u r b u -l e n c e .Rigid FormT h e r i g id f o r m p o s s e s s e s a v e r y s m a l l f l e x i b i li t y m i xa n d t h e c o n t r o l l a b i l i t y o r c h a n g e a b i l i t y o f t h e o r g a n -

i z a t i o n i s l o w . T h e f l e x i b i l it y m i x i s d o m i n a t e d b ys i m p l e r o u t i n e s . I n a d d i t i o n , t h e c h o i c e a n d v a r i a t i o np o s s i b i l i t i e s a r e l i m i t e d ; i m p r o v i z a t i o n i s a t a b o o i nt h i s o r g a n i z a t i o n . T h e m a t u r e t e c h n o l o g y ( r o u t i n e ) ,t h e f u n c t i o n a l iz e d a n d c e n t r a l i z e d s t r u c t u r e w i t hm a n y h i e r a r c h i c a l l a y e rs ( m e c h a n i s t i c ) t o g e t h e r w i t ha m o n o t o n o u s a n d n a r r o w - m i n d e d c u l t u r e (c o n -s e r v a t i v e ) d o n o t a l l o w a n y p o t e n t i a l f o r f l e x i b i li t ya n d r e s u l t i n a f r a g i l e a n d v u l n e r a b l e o r g a n i z a t i o n .Planned FormT h e p l a n n e d f o r m a l s o h a s a n a r r o w f l e x i b il i ty m i x ,b u t t h e v a r i e t y o f r o u t i n e s a n d t h e c o n t r o l l a b i l i t y a r el e s s l i m i t e d t h a n i n th e r i g i d o r g a n i z a t i o n . T h ef l e x i b i li t y m i x m a i n l y c o n s i s t s o f s p e c i f i c r u l e s a n dd e t a i le d p r o c e d u r e s w h i c h a r e s o p h i s t i c a t e d a n dc o m p l e x a n d r e q u i r e a n e x t e n s i v e in f o r m a t i o n p r o -c e s s i n g c a p a c i ty . M o r e o v e r , f o r e v e r y p o s s i b l e c h a n g et h e o r g a n i z a t i o n h a s d e v e l o p e d a c e r t a i n r o u t i n e .T h e r i g i d i t y o f t h i s o r g a n i z a t i o n a l f o r m i s n o t ar e s u l t o f t h e t e c h n o l o g y o r th e b a s i c o r g a n i z a t i o n a ls t r u c t u r e , b u t o f s t r o n g p r o c e s s r e g u l a t i o n s s u c h a ss t a n d a r d i z a t i o n , f o r m a l i z a t i o n a n d s p e c i a l i z a t i o n ,a n d v e r y d e t a i l e d p l a n n i n g a n d c o n t r o l s y s t e m s . A l s o ,t h e s h a r e d c u l t u r a l b e l i e fs a n d a s s u m p t i o n s g i ve v e r yl i tt le l e e w a y f o r d e v i a n t i n t e r p r e t a t i o n s o f t h ee n v i r o n m e n t , a n d d i s s o n a n c e i s p o t e n t i a l l y th r e at -e n i n g t h e o r g a n i z a t i o n s i n t e g r it y . A s l o n g a s t h e r e a r en o u n e x p e c t e d c h a n g e s , t h e c o n t r o l la b i l i ty o f s u c h a no r g a n i z a t i o n i s h i g h . H o w e v e r , if c h a n g e s o c c u r t h a ta r e n o t a n t i c i p a t e d i n t h e p l a n n i n g r e p e r t o i r e a n d a r et h r e a t e n i n g t h e s h a r e d i d e a s y s t e m , t h e r e s u l t i s as i t u a t i o n k n o w n a s s t r a t e g ic d r i ft , 1~ i n w h i c h c o n -s c i o u s l y m a n a g e d i n c r e m e n t a l c h a n g e s d o n o t n e c e s s -a r il y k e e p p a c e w i t h e n v i r o n m e n t a l c h a n g e s. I n e rt ias e t s i n a n d t h e o r g a n i z a t i o n b e c o m e s ri g id .Chaotic FormT h e c h a o t i c f o r m h a s a v e r y e x t e n s i v e f le x i b i l it y m i xd o m i n a t e d b y s t r a t e g i c f l e x i b i l i t y , b u t i s t o t a l l yu n c o n t r o l l a b l e . I n s u c h o r g a n i z a t i o n s t h e p o s s i b i l i t i e sf o r v a r i a t i o n a r e u n l i m i t e d , b e c a u s e t h e r e i s n oa n c h o r a g e w i t h i n t h e o r g a n iz a t io n a l c o n d i t i o n s . T h ei n n u m e r a b l e i n i t ia t i v e s f o r c h a n g e a r e i m p o s s i b l e toi m p l e m e n t . A d i s t i n c t t e c h n o l o g y , a d m i n i s t r a t i v es t r u c tu r e s a n d b a s i c s h a r e d v a l u e s s t e m m i n g f r o m t h eo r g a n i z a t i o n a l c u l t u r e a r e l a c k i n g . C o n s e q u e n t l y , t h ee n v i r o n m e n t c a n d i r e c t l y f o r c e t h e o r g a n i z a t i o n i n toa c e r t a i n d i r e c t i o n ; i . e . t h e o r g a n i z a t i o n i s c o n t r o l l e db y t h e e n v i r o n m e n t . T h e l a c k o f a d m i n i s t ra t i v e s ta b -i l it y is c a u s e d b y s t r a t e g ic n e g l e c t , w h i c h r e f e r s t ot h e m o r e o r l e s s d e l i b e r a t e t e n d e n c y n o t t o p a y a t t e n -t i o n to t h e a d m i n i s t r a t i v e s t r u c t u r e o f t h e o r g a n -i z a t io n . A s a r e s u l t , e m e r g i n g a d m i n i s t r a t i v ep r o b l e m s d e t e r i o r a t e f r o m p e t t y a n d t r i v i a l t o s e v e r ea n d d i s r u p t iv e . T h e r a n g e o f p o s s i b l e p r o c e d u r e s i ss o l a r g e t h a t m a k i n g a c h o i c e i s v e r y d i f f i c u l t a n dm a n a g e r s d e c i s i o n - m a k i n g c a p a c i t y i s g r e a t ly

Long Range Plan ning Vol. 30 April 1997


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r e d u c e d . 4 D e c i s i o n s a re d e l a y e d a l t h o u g h t h e s i t u -a t i o n re q u i r e s i m m e d i a t e a c t i o n .lexible F o r m

F i n a l l y , t h e f l e x i b l e fo r m i n t h e t y p o l o g y h a s a l a r g ea n d r i c h fl e x i b il i ty m i x d o m i n a t e d b y s t ra t e g ic a n ds t r u c t u r a l fl e x i b i l i t y . I n a d d i t i o n , t h e c o n t r o l l a b i l i t yo f t h e o r g a n i z a t i o n a l c o n d i t i o n s i s r e a s o n a b l y h i g h .D i s t u r b a n c e s a r e m e t e f f e c t i v e l y w i t h a le r t a d a p -t a t i o n s w i t h o u t t h e o r g a n i z a t i o n l o o s i n g i t s d i s -t i n c t i v e n e s s . R e s i s t a n c e t o s i g n a l s o f t h r e a t t o t h e i d e as y s t e m i s l o w a n d t h e s y s t e m a d a p t s . C h a n g e c a n b ei m p l e m e n t e d e a s i ly t h r o u g h a d a p ta t i o n s w i t h i n t h ec u r r e n t ( n o n - r o u t i n e ) t e c h n o l o g y a n d ( o r g a n ic ) s t r u c -t u r e . T h e o r g a n i z a t i o n i s a b le t o r e s i s t b e i n g o v e r -w h e l m e d b y it s i m m e d i a t e e n v i r o n m e n t a n dc o n s e q u e n t l y l o s i n g i t s d i s t i n c t i v e n e s s . I t d e v e l o p ss o m e d o m i n a n c e o v e r it s e n v i r o n m e n t t o p r e se r v e i tsi d e n t it y . T h e b a l a n c e b e t w e e n c h a n g e a n d p r e s -e r v a t i o n i s w e l l m a n a g e d .

T r a j e c t o r ie s o f T r a n s f o r m a t i o nT h e f o u r - c e l l t y p o l o g y o f o r g a n i z a t i o n a l f o r m s i si m p o r t a n t f o r u n d e r s t a n d i n g t h e p r o c e s s o f v a r i a t i o n

i n t h e c o m p o s i t i o n o f t h e f le x i b i l it y m i x a n d t h ed e s i g n o f t h e o r g a n i z a t i o n a l c o n d i t i o n s o v e r ti m e . T h et y p o l o g y i l lu s t r a t e s t h a t n o n e o f th e f o r m s i s a p e r -m a n e n t s o l u t i o n . F r o m t h is o r g a n i z a t i o n a l t y p o l o g y ,t h e r e f o r e , w e c a n o b t a i n d i f f e r e n t st rategic t rajec to r ies o f t rans fo rmat ion f o r c o p i n g w i t h v a r y i n gd e g r e e s o f e n v i r o n m e n t a l t u r b u l e n c e .

A T r a j ec to r y o f R o u i n i za t i o nI n o u r o r g a n i z a t i o n a l t y p o l o g y , t h e p r o c e s s o f t ra n -s i t i o n f r o m a c h a o t i c s t a t e t o a f l e x i b l e , p l a n n e d a n dr i g i d f o r m c a n b e d e s c r i b e d a s a n a t u r a l t r a j e c to r y o fr o u t i n i z a t i o n . S u c h a t r a je c to r y o f r o u t i n i z a t i o n ( s eeF i g u r e 3 ) s u g g e s t s t h a t s t a rt i ng f i r m s o r n e w v e n t u r e so p e r a t e c h a o t i c a l l y i n o r d e r t o d e v e l o p n e w c a p a -b i l i t i e s .

S u c h a c h a o t i c s t a t e o f l o o s e a n d u n s e t t l e d r e l a t io n -s h i p s i s o r g a n i c a n d r e s p o n d s e a s i l y to e n v i r o n m e n t a lc h a n g e , b u t n e c e s s a r i l y h a s s l a c k a n d i s i n e f f i c i e n t . 18F o r s u c h a n o r g a n i z a t i o n , t h e r e f o r e , t o g e t o f f t h eg r o u n d , i t m u s t b e s u f f i c ie n t l y w e l l o r g a n i z e d t o b el i ft e d f r o m a c h a o t i c s t a t e o f r a n d o m , d i s c o n n e c t e da n d u n c o o r d i n a t e d i m p u l s e s . T h i s r e q u i r e s a c a p a c i t yf or a c h i e v i n g s o m e d e g r e e o f strategic focu s.

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m o r e p r e d i c t a b l e , t h e f l e x i b l e o r g a n i z a t i o n f a c e s ac r i si s . A t t h i s p o i n t , i t h a s t o b e c o m e m o r e e f f i c i e n t i ni t s o p e r a t i o n s i n o r d e r t o b e a b l e t o e x t r a c t g r e a t e rb e n e f i t f r om t h e c h a n g e s t h a t i t i n t r o d u c e dp r e v i o u s l y . T h e o r g a n i z a t i o n n e e d s t o b e t r a n s fo r m e di n a m a n n e r w h i c h b e s t p e r m i t s i t to e x p l o i t t h e e x i s t -i n g k n o w l e d g e a n d o p p o r t u n i t i e s . T h i s t r a n s it i o nf r o m a fl e x i b l e t o w a r d s a p l a n n e d f o r m c a n b e p o r -t r a y e d a s a p r o c e s s o f m a t u r a t i o n . M a t u r a t i o n r e q u i r e sa g r ea t er n e e d t o p r o f e s s i o n a l i z e a n d i n s t i t u t i o n a l i z et h e i n t e l l i g e n c e - g a t h e r i n g a n d i n f o r m a t i o n - p r o -c e s s i n g f u n c t i o n a n d t o i n t e g r a t e t h e e f f o r t s o fd e c i s i o n m a k e r s b y f o r m a l m e a n s 19 ( p r o c e s s r e g u -l a t i o n s ) . A t t h i s s t a g e , t h e r e f o r e , t h e o r g a n i z a t i o nn e e d s t o b e a b l e t o in t e n s i f y i t s m e t a f l e x i b i l i ty a p p r o -p r i a t e l y , s o a s t o i m p r o v e i t s c a p a c i t y t o p l a n , m o n i t o ra n d c o n t r o l t h e si t u a t i o n , a n d to i m p l e m e n t d e c i s i o n sa n d p r o c e d u r e s w h i c h w o u l d h e l p t o re d u c e t h e l ev e lo f e n v i r o n m e n t a l t u r b u l e n c e .

N o n e t h e l e s s , i n t h e p r o c e s s o f a d a p t in g a n d r e f i n i n gt h e o r g a n i z a t i o n a l c o n d i t i o n s i n o r d e r t o e x p l o i t t i m ea n d r e s p o n s e o p p o r t u n i t i e s e f f i c ie n t l y , t h e p l a n n e do r g a n i z a t i o n r u n s t h e r i s k o f l o s i n g i t s s tr a t e g i c a n ds t r u c t u r a l f l e x i b i l i t y a s i t c o n c e n t r a t e s i n c r e a s i n g l yu p o n t h e a c c u m u l a t i o n o f a l a rg e n u m b e r a n d v a r i e t yo f o p e r a t i o n a l p r o c e d u r e s a n d r o u t i n e s ( o p e r a t i o n a lf l e x ib i l i t y ). I n t h e s e c i r c u m s t a n c e s i t b e c o m e s p r o -g r e s s i v e l y r i g i d . In t h is p r o c e s s t o w a r d s t a g na t i o n t h er o u t i n i z a t i o n a n d s y s t e m a t i z a t i o n o f o r g a n i z a t i o n a lc o n d i t i o n s b r i n g b u r e a u c r a t ic m o m e n t u m , t r a d i ti o n s

a n d r e s i s t a n c e t o c h a n g e . T h e s e a l l p l a y a n i m p o r t a n tr o l e i n b o o s t i n g c o n s e r v a t i s m . A s a re s u l t, t h e r i g i df o r m is c h a r a c t e r iz e d b y a r e d u c e d e m p h a s i s o n p r o d -u c t - m a r k e t i n n o v a t i o n , r i sk ta k i n g a n d p r o a c t i v e n e s s .T h e r i g i d f or m h a s p u r s u e d t h e e v o l u t i o n o f it s d e v e l -o p m e n t t o th e e x t r e m e a t t h e c o s t o f d e c r e a s e d f l e x i -b i l i t y a n d i n n o v a t i v e c a p a c i t y .T h e e ve r se T r a j e c to r y o f e vi t a l i z a ti o nF o r m a n y o r g a n i z a t i o n s , i n d e e d , t h e t ra n s i t i o n f r o mc h a o t i c s t a te t o w a r d s a r i g id o r g a n i z a t i o n m a y b er e g a r d e d a s a n a t u r a l t r a j ec t o r y o r l i f e c y c l e .H o w e v e r , a t r a n s i ti o n i n t h e r e v e r se d i r e c t i o n m a y ,i n o u r t y p o l o g y , a l s o b e p e r c e i v e d a s a t r a j e c t o r y ,a l t h o u g h i t m a y n o t b e a s ea s y t o a c h i e v e o r s e e m a sn a t u r a l a s t h e f o r m e r p r o c e s s ( s e e F i g u r e 4 ) . M a n y

l a r g e c o r p o r a t i o n s l i k e G E , I B M a n d P h i l i p s r e a l i z e dy e a r s a g o t h a t th e y h a d g o n e t o o f a r w i t h s u c h a p r o -c e s s o f r o u t i n i z a t i o n a n d h a d b e c o m e e x t r e m e l y r ig i do r g a n i z a t io n s . T h e y w a n t e d t o r e v i t a l i ze t h e c o m p a n yi n t o a m o r e f l e x i b l e o r e v e n c h a o t i c f o r m . S o m eo b s e r v e r s a r g u e t h a t o l d e r , l a r g e r c o r p o r a t i o n s m u s td i e o f f , l i k e d i n o s a u r s , t o b e s u c c e e d e d b y a n e w b r e e db e t t e r a d a p t e d t o i t s e n v i r o n m e n t , i n m u c h t h e s a m ew a y t h a t h a s c h a r a c t e r i z e d b i o l o g i c a l e v o l u t i o n . I nc o n t r a st w i t h s u c h a n a i v e s e l e c t i o n p e r s p e c t i v e ,r e s e a r c h e r s l i k e K a n t e r 2 a n d B a d e n - F u l l e r a n d S t o p -f o r d 21 s h o w e d t h a t m a t u r e c o r p o r a t i o n s c a n m o u l dt h e m s e l v e s i n t o f l e x i b l e fo r m s t h a t b a l a n c e c o r p o r a ted i s c i p l i n e w i t h e n t r e p r e n e u r i a l c r e a t i v i t y . H o w e v e r ,

Long Range Planning Vol. 30 April 1997


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t h e y a r g u e t h a t r e b u i l d i n g a m a t u r e o r g a n i z a t i o n t a k e st i m e a n d t h a t f i r m s m u s t a v o i d q u i c k f i x e s . I n f a c t ,t h e r e a re m a n y r o u t e s m a t u r e c o r p o r a t i o n s m i g h t t ak e .O n t h e b a s i s o f o u r o r g a n i z a t i o n a l t y p o l o g y , w e w i l lp r o v i d e a m o r e s y s t e m a t i c m e t h o d f or su p p o r t i n gm a n a g e m e n t e f fo r ts d i r e c t e d t o w a r d s r e v i t a l i z a ti o no f m a t u r e o r d e c l i n i n g o r g a n i z a t i o n s . S u c h t ra -j e c to r i e s a r e m o s t l i k e l y to b e e f f e c ti v e u n d e re x t r e m e l y t u r b u l e n t e n v i r o n m e n t s .

T h e F R M e t h o d i n P r a c ti c eT h e F A R m e t h o d p r o v i d e s t h e p r a c t i t io n e r w i t hi n s t r u c t i o n s f o r s y s t e m a t i c a l l y d e s c r i b in g , a n a l y s i n ga n d a s s e s s in g t h e r e q u i r e d f l e x ib i l i t y d e r i v e d f r o mt h e l ev e l o f e n v i r o n m e n t a l t u r b u l e n c e , m a n a g e m e n t sa c t u a l f l e x ib i l it y m i x a n d t h e r e s p o n s i v e n e s s o f t h eo r g a n i z a t i o n i n t e r m s o f o u r t y p o l o g y ( se e F i g u r e 5 ) .M o r e o v e r , th e m e t h o d s u p p o r t s t h e c o n s u l t a n t i nd e r i v in g r e c o m m e n d a t i o n s f o r r e d e s i g n in g t h e o r g an -i z a t i o n in o r d e r to r e d u c e t h e g a p b e t w e e n r e q u i r e da n d a c t u a l f l e x i b i l it y . In t h e v a r i o u s p h a s e s o f t h ep r o c e s s o f r e v i t a l iz a t i o n , t h e F A R m e t h o d p o s e s t h ef o l l o w i n g q u e s t i o n s :

O r i e n t a t i o n : W h a t i s th e p o i n t o f d e p a r t u r e o f th eor gan i za t i ona l un i t ( s t ra t eg i c g r oup ,s t akeho l de r s ana l ys i s , adequ acy o f f l ex i b i l i t yl a b e l, b o u n d a r y d e c i s i o n s , h i s to r y ) ?

Analysis

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W h a t a r e t h e i n p u t s , th r o u g h p u t s a n d o u t p u t so f t h e o r g a n i z a t i o n a l u n i t a n d w h i c h e x t e r n a le l e m e n t s o r c o n s t i t u e n t s a r e i m p o r t a n t f o ra t t ai n i n g t h e s e i n p u t s a n d d i s p o s i n g o f th eo u t p u t s ( s p e c i fi c a ti o n o f p r i m a r y p r o c e s s )?H o w f l e x ib l e d o e s t h e o r g a n i z a t io n a l u n i th a v e t o b e ( d e s i re d s t a te d e p e n d i n g o n t h ed e g r e e o f e n v i r o n m e n t a l t u r b u l e n c e ) ?How f l ex i b l e i s t he o r gan i za t i on a t t hem o m e n t ( c u r r e n t s t a te d e p e n d i n g o n t h eac t ua l f l ex i b i l i t y mi x and f l ex i b i l i t y po t en t i a lw i t h i n t h e o r g a n i z a t i o n a l c o n d i t i o n s ) ?I s t h e r e a g a p b e t w e e n t h e r e q u i r e d f l e x i b i li t ym i x a n d t h e a c t u a l f l e x i b i l it y m i x( d i s c r e p a n c y a n a l y si s )?I f so , wha t a r e t he r e l evan t f l ex i b i l i t y a spec t s ,t y p e s o f f l e x ib i l it y a n d r e q u i r e d i n f o r m a t i o nac t i v i t i e s?H o w s h o u l d a m o r e f l e x i b le o r g a n i z a ti o n b er e d e s i g n e d ?W hat a r e poss i b l e des i gn va r i ab l e s f o ri m p r o v i n g t h e f l e x i b i li t y p o t e n t ia l o f th eo r g a n i z a t io n ( t e c h n o lo g i c a l , s tr u c t u r a l a n d / o rcu l t u r a l des i gn va r i ab l e s ) ?W h a t s t eps hav e t o be taken ( s t ra t eg i ct r a j ec t o r i e s o f change) ?W h a t p e r s o n s a n d r e s o u r c e s s h o u l d b ei n v o l v e d a n d a t w h a t t i m e ?

I n o r d e r to te s t t h e m e t h o d , i t w a s a p p l i e d i n th r e ed i f f e r e n t o r g a n i z a t i o n u n i t s o p e r a t i n g i n d i f f er e n t ,c h a n g i n g e n v i r o n m e n t s : a n a d m i n i s t r a t i v e u n i t X o ft h e D u t c h P o s t b a n k , a p r o d u c t i o n u n i t Y o f P h i l i p s

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C D i s c r e p a n c y0 . P o s i t io n i n t y p o l o g y1 . R e l a t i v e f l e x i b i l i t y a s p e c t s2 . R e l a t i v e f l e x i b i l i t y t y p e s3 . L a c k i n g i n f o r m a t i o n a c t i v i t i e s

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D T r a n s f o r m a t i o n1. D e s i g n e l e m e n t s ; t e c h n o l o g y s t r u c tu r e c u l t u r e2 . P h a s e s ; s t a g e s i n c h a n g e3 . O r g a n i z a t i o n ; p e r s o n s r e s o u r c e s t i m e

S e m i c o n d u c t o r s a n d a n R D u n i t Z o f t h e D u t c h G a sC o m | ) a n y . 22 I n e a c h o f t h e s e c a s e s t h e r e w a s a c l e a rn e e d f o r f l e x i b i l i t y c lu e t o a s h i f t i n t h e l e v e l o fe n v i r o n m e n t a l t u r b u l e n c e . I n e a c h c a se w e c o n d u c t e dp r e - m e a s u r e m e n t s o f t h e l e v e l o f e n v i r o n m e n t a l t ur -b u l e n c e , t h e f l e x ib i l i t y p o t e n t i a l w i t h i n t h e o r g a n -i z a t io n a l c o n d i t i o n s a n d t h e c o m p o s i t i o n o f t h ef le x i bi l i ty m i x . T h e s e p r e - m e a s u r e m e n t s a l l o w e d u st o g e n e r a t e a d v i c e c o n c e r n i n g e f f e c ti v e s t ra t e g ic t r a -

j e c to r i e s o f r e v i t a l iz a t i o n . A f t e r i y e a r w e c o n d u c t e da p o s t - m e a s u r e m e n t i n o r d e r to v a l id a t e t h e r e c -o m m e n d a t i o n s o f t h e F A R m e t h o d ( s e e F i g u r e 6 ).The Dutch Postbank ProfessionalRevitalization of Department XT h i s t ra j e c t o r y w a s f o u n d w i t h i n t h e A d m i n i s t r a t i v eD e p a r t m e n t X o f t h e D u t c h N a t i o n a l P o s t b a n k , t h ef if th l ar g e s t b a n k o f T h e N e t h e r l a n d s . T h e b a n k w a s

L ong Range P l ann i ng Vol . 30 Ap r i l 1997


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recent ly privatized. In the past, its main line of busi-ness was retail banking because of restrictions~mposed by the Dutch governmen t. It largely prov idedstandardi zed services to more than 6 milli on accountholders. After the deregulati on it intended to providemore cu stom ized services as a part of corporate bank-ing. The bank was confronted with increasingnational and international competition, new infor-mation technologies in banking, an increased pres-sure on interest margins and the i ntroduct ion of newbanking-related services.On the basis of results of the pre-m easure ment, wefound that Administrative Department CorporateAccounts of the Dutch Postbank had hardly anyflexibility mix and possessed a routine technology,a very mechanistic structure and, to some extent, aconservative culture. Department X correspondedwith the rigid form in our typology.Nonetheless, the environmental turbulence profileshowed that the environment of the department wasno longer stable, but highly complex and dynamic,especially regarding the composi tion of the workload,developments in infor mation technologies and spec-ific requirements of clients. According to ourtypology, this shift in environmental turbulence,which is largely predictable, requires a more com-prehensive flexibility mix d ominat ed by operationalflexibility together with a more non-r outine tech-nology. Management must activate many soph-isticated routines to deal with these dynamic andcomplex changes. To facilitate such routine pro-liferation, the man agement of Department X needs amore extensive information processing capacity to

anticipate complex changes. This transition from arigid to a more planned organization can be referredto as a process of professional revitalization (see Fig-ure 7 ).Such a comprehensive and often dramatic move-ment away from traditions, conservatism and rigiditytowards adaptiveness, vigilance and diversificationcould stimulate Department X to track the externalenviro nment and to discover new market forces. Thetransition we suggested could help the departmen t tobecome more adaptive and sensitive to market forces,to vary its product line and vol ume more easily, andto become more aggressive and innovative in dealingwith new services and more imaginative in meetingthe needs of external and internal clients.The post-measurement shows that a strategic tra-jectory of professional revitalization had resulted ina planned form. The Administrative Department,which was confronted with increasing environmentaldyna mis m and complexity, was able to activate oper-ational short-term volume and mix flexibility orig-inating from a more non- rout ine te chnol ogy and a lessmechanistic organizational form. Nonetheless, as aconsequence of a lack of preservation in its culture,this increased potential could not be utilized opti-mally. The transmission of appropriate core valuesby socialization was not sufficiently worked out bymanagement.Phi l i p s Semi con duc t o r s En t r epr eneur i a lRev i t a l iz a t i on o f As s em b l y Depar t men t YThis transition was found within Philips Semi-conductors Assembly Department Glass-Bead

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O p e r a t i o n a l S t r u c t u r a l S t r a t e g icf l e x i b i l i t y f l e x i b i l i t y f l e x i b i l i t yl e x i b i l i t y m i x

D i o d e s , w h i c h w a s p r o f e s s i o n a l l y o r g a n i z e d w i t h i nt h e p r o d u c t l i n e M e d i u m P o w e r R e c t i f i e r s a n d S t a c k sf o r a r e a s o n a b l y t u r b u l e n t e n v i r o n m e n t ( d y n a m i c ,c o m p l e x b u t la r g e l y p r e d i c t a b le ) . T h e D e p a r t m e n te m p l o y e d a n e x t e n s iv e f l e x i b il it y m i x , d o m i n a t e d b yo p e r a t i o n a l f l e x i b il i t y , a n d p o s s e s s e d a m o r e n o n - r o u -t i n e t e c h n o l o g y , a m e c h a n i s t i c s t r u c t u re a n d a c o n -s e r w tt iv e c u l t u re . A l s o , w e f o u n d h i g h l y d e v e l o p e di n t e l l i g e n c e s y s t e m s a s a p a r t o f t h e m e t a f l e x i b i l i t ya n d m a n y s t r u c t u ra l p r o c e s s r e g u l a t i o n s m e a n t t of a c il i ta t e t h e d e v e l o p m e n t o f r o u t i n e s . H o w e v e r , d u et o t h e p ar t ia l i m p l e m e n t a t i o n o f a l a rg e T e c h n o l o g yR e d e s i g n P r o j ec t , t h e t e c h n o l o g y w a s n o t a s n o n - r o u -t i n e a s w e h a d p r e d i c t e d . C o n s e q u e n t l y , t h e d e p a r t-m e n t s t i l l h a d p r o b l e m s a c t i v a t i n g o p e r a t i o n a lf l e x i b il i t y a n d d i d n o t t o t a l l y c o r r e s p o n d w i t h t h ep l a n n e d c o n f ig u r a t io n , b u t w a s p o s i t i o n e d s o m e w h e r e b e t w e e n t h e r i gi d a n d p l a n n e d f o r m in o u rt y p o l o g y ( s e e F i g u r e 8 ) .

F u r t h e r m o r e , t h e e n v i r o n m e n t a l t u r b u l e n c e p r o f i l es h o w e d t h at th e e n v i r o n m e n t o f A s s e m b l y D e p a r t-m e n t Y w a s n o l o n g er o n l y c o m p l e x a n d d y n a m i c , b u ta l s o u n p r e d i c t a b l e , e s p e c i a l l y r e g a r d i n g t h e d e v e l -o p m e n t s i n o u t e r t e c h n o l o g i e s ( i n t r o d u c t i o n o f p l a s t i c

d i o d e s , r e l e a s e o f h i g h e r - v o l t a g e s v e r s i o n s , n e w c r y s -t a l t y p e s a n d t h e a d v a n c e o f in t e g r a t e d c i r c u i t s i n t h ea p p l i c a t i o n m a r k e t s a n d p r o d u c t - m a r k e t c o m -b i n a t i o n s ( P M C s ) (p r i ce e r o s i o n a n d u n f o r e s e e n v o l -u m e d e v e l o p m e n t s ) . I n t h is c o n n e c t i o n , p u r ea n t i c i p a t i o n i n t e r m s o f r o u t i n e p r o l i f e r a ti o n i s i n s u f -f i ci e nt . A s t r o n g c o m m i t m e n t t o a l i k e ly f u t u r e m a ye v e n r e d u c e t h e a s s e m b l y d e p a r t m e n t s r e c e p t i v e n e s st o c h a n g e . I n s t e a d o f f u r t h e r i n c r e a s i n g i t s i n f o r -m a t i o n - p r o c e s s i n g c a p a c it y , m a n a g e m e n t s h o u l dr e d u c e t h e n e e d f o r i n f o r m a t i o n p r o c e s s i n g a n dd e v e l o p s t r u c t u r a l a n d s tr a t e g i c f l e x i b i l it y . T h i s t ra n -s i t i o n f r o m a m e r e l y p l a n n e d f o r m t o a m o r e f l e x i b lef o r m i s r e f er r e d t o a s a tr a j e c t o r y o f ent repreneur ia lrev i t a l i za t i on

T h e p l a n n e d c o n f i g u r a t i o n i s s e r i o u s l y h a n d i -c a p p e d w h e n c o n f r o n t e d w i t h f u n d a m e n t a l l y u n -p r e d i c t a b l e e n v i r o n m e n t s . A tr a j ec t o r y o fe n t r e p r e n e u r i a l r e v i t a l i z a t io n c o u l d h e l p t h eA s s e m b l y D e p a r t m e n t t o e x p l o i t m o r e e a s i l yu n k n o w n o p p o r t u n i t i e s i n t e c h n o l o g i e s a n d P M C s .I n a d d i t i o n , t h e d e p a r t m e n t s t i ll n e e d e d o p e r a t i o n a lf l e x i b il i ty f o r s h o r t - te r m f l u c t u a t i o n s i n d e m a n d .M o r e o v e r , t h e s e n s o r a n d i n f o r m a t i o n - p r o c e s s i n g

L on g R an ge P lan n in g V ol . 30 A p r i l 1997


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c a p a c i t y w o u l d h a v e t o b e v e r y r u d i m e n t a r y f o r s tr a -t e g i c f l e x i b i l i t y a n d d i r e c t e d t o w a r d s e n h a n c i n g t h er e c e p t i v e n e s s t o n e w e n v i r o n m e n t s .

T h e r e s u lt s o f th e p o s t - m e a s u r e m e n t s h o w t h at t hi st r a j e c to r y o f e n t r e p r e n e u r i a l r e v i t a l i z a t i o n r e s u l t e d i na h y b r i d o f a p l a n n e d / f l e x i b l e f o r m . T h i s t r a n s i ti o n o fe n t r ep r e n e u ri a l r e v i t a li z a t io n w a s a c c o m p l i s h e d b yr a d i c a l l y t r a n s f o r m i n g t h e f ir m f r o m a b u r e a u c ra t i c ,c o n s e r v a t i v e c o m p a n y t o o n e t h a t i s i n n o v a t i v e a n dr e s p o n s i v e . T h e d e v e l o p m e n t o f a u t o n o m o u s ta s kg r o u p s , i n t e r d is c i p li n a r y m a r k e t i n g - p r o d u c t i o n -d e v e l o p m e n t t e a m s , l es s f o r m a l p la n n i n g a n d c o n t r o lt o g e th e r w i t h t h e d e v e l o p m e n t o f a u n i q u e l o g o f o rt h e p l a n t, t h e o r g a n i z a t i o n o f s o c i a l e v e n t s , s p e c i a lt r a i n in g a n d a n e w s b u l l e t i n f o r e m p l o y e e s m a d e t h i st r a n s f o r m a t i o n p o s s i b l e .T h e D u t c h N a t i o n a l G a s C om pa n y : S tr a t e g i cF o c u si n g o f R D D e p a r t m e n t ZI f t h e o r g a n i z a t i o n i s s u c c e s s f u l i n a c h i e v i n g a m a j o rt r a n s f o r m a t i o n , i t f a c e s t h e o p p o s i t e d a n g e r o f ' o v e r-s h o o t i n g ' i t s ta r g et a n d b e c o m i n g ' c h a o ti c '. T h i sp o s s i b i l i t y a r i s e s f r o m t h e d a n g e r o f s t r a t e g ic n e g l e c t ,

i .e . t h e f a i lu r e t o r e t a i n t h e n e c e s s a r y s t r a t e g i c f o c u sa n d th e c o n d i t i o n s w h i c h w i l l e n a b l e th e c o m p a n y t oo r g a n i z e i t s e l f s u f f i c i e n t l y t o c r e a t e a n d / o r t oi m p l e m e n t r a d i ca l i n n o v a t i o n s . T o e x e m p l i f y , w i t h i nt h e D u t c h N a t i o n a l G a s C o r p o r a t i o n , w e f o u n d t h a tt h e R D D e p a r t m e n t f u n c t i o n e d i n a n i n c r e a s i n g l yc o m p l e x , d y n a m i c a n d u n p r e d i c t a b le e n v i r o n m e n ta n d p o s s e s s e d a v e r y n o n - r o u t in e t e c h n o l o g y a n d a ne x t r e m e l y i n n o v a t i v e c u l t u r e . A l s o , t h e d e p a r t m e n t ' si n f o r m a t i o n - p r o c e s s i n g c a p a c i t y w a s v e r y r u d i -m e n t a r y . N o n e t h e l e s s , t h e d e p a r t m e n t ' s s t r u c tu r e w a sl e s s o r g a n i c t h a n w e h a d e x p e c t e d , d u e t o th e s p l i t ti n gu p o f m a n a g e m e n t t a s k s , m a n y h i e r a r c h i c a l l e v e l s ,l o n g h o r i z o n t a l c h a i n s a n d s tr i ct p l a n n i n g s y s t e m s .F u r t h e r m o r e , c o m p a r e d t o t h e e n o r m o u s p o t e n t i a l f o rs t r a t e g i c f le x i b i l i t y , t h i s w a s n o t a s h i g h a s w e h a de s t i m a t e d . E s p e c i a l l y , t h e i n i t ia t i o n o f n e w r e s e a r c hp r o g r a m m e s w h i c h r e q u i r e d c r o s s - s e c t i o n a l p r o j e c t sw a s p r o b l e m a t i c f o r t h e d e p a r t m e n t .

T h e R D D e p a r t m e n t d i d n o t c o r r e s p o n d w i t h th ef l e x i b l e f o r m , b u t c o u l d b e c h a r a c t e r i z e d b e t t e r a s ac h a o t i c f o r m i n o u r o r g a n i z a t io n a l t y p o l o g y ( s e e F i g -u r e 9 ) . T h e r e w a s a n u n l i m i t e d p o t e n t i a l f o r f le x i -

Bui ld in g F lexib le Organizat ions for Fas t-m ovin g Markets


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b i l i ty , b u t it w a s i m p o s s i b l e f o r m a n a g e m e n t t oa c t i va t e t h i s p o t e n t i a l d u e t o t h e l a c k o f p r e s e r v a t i o ni n i t s c u lt u r e . I n o t h e r w o r d s , t h e d e p a r t m e n t w a s t o of l e x i b l e . T h e r e w e r e m a n y i n i t i a t i v e s f o r n e w r e s e a r c hb u t th e y c o u l d n o t be i m p l e m e n t e d b e c a u s e t h e rew e r e n o c l e a r a d m i n i s t r a t iv e s t r u c tu r e s a n d s h a r edv a l u e s . N o r d i d t h e d e p a r t m e n t h a v e a d e q u a t e i n f o r -m a t i o n r e g a r d i n g m a n - h o u r s , c o s t s a n d t e c h n i c a l p r o -g r e ss p e r p r o je c t . T h e s c h i z o p h r e n i a o f t h ed e p a r t m e n t r e s u l t e d i n d i s t o r t e d i n f o r m a t i o n o n t h eb a s is o f w h i c h m a n a g e m e n t c o u l d n o t m a k e a p p ro -p r i a t e d e c i s i o n s . T h i s s t r a t e g i c n e g l e c t , o r t h e i g n o r -a n c e o f a d m i n i s t r a t iv e s t r u ct u r e s a n d a s h a r e d c u l t u r et o g e t h e r w i t h t h e o p p o r t u n i s t i c b e h a v i o u r o f i n d i -v i d u a l r e s e a rc h e r s r e s u l t e d i n a l a c k o f d e c i s i v e n e s sr e g a r d i n g r e s e a r c h p r i o r i t i e s , a f r a g m e n t e d s t r u c t u r ea n d a l o o s e c o n s t e l l a t i o n o f v a r i o u s s u b c u l t u r e s .

A c c o r d i n g t o o u r o r g a n i z a t i o n a l t y p o l o g y , t o l i f tt h i s o r g a n i z a t i o n f r o m a c h a o t i c s t a te o f r a n d o m , d i s -c o n n e c t e d a n d u n c o o r d i n a t e d i m p u l s e s t o w a r d s am o r e f l e x i b l e c o n f i g u r a t i o n , a t r a j e c t o r y o f str tegicf ocus ing i s r e q u i r e d ( s e e F i g u r e 9 ) . T h i s s t r a t e g i cf o c u s i n g m a y b e m a n i f e s t e d i n p r e s e r v i n g a h i g h e r -

o r d e r c o r e c u l t u r e a n d e s t a b l i s h i n g c l e a r e r a d m i n -i s t r a t i v e s t r u c t u r e s . F u r t h e r m o r e , t o a c t i v a t e t h ea p p r o p r i a t e f l e x i b i l i t y - i n c r e a s i n g p r o c e d u r e s , m a n -a g e m e n t w o u l d h a v e t o c o n d u c t m o r e i n f o r m a t i o n -s c a n n i n g a s a p a r t o f t h e m e t a f l e x i b i l i t y .

O u r p o s t - m e a s u r e m e n t s h o w e d t h a t t h e o r ig i n a l l yc h a o t i c r e s e a r c h d e p a r t m e n t w a s a b l e t o a c t i v a t e ab r o a d e r f le x i b i l i t y m i x d o m i n a t e d b y s t r u c tu r a l f l ex i -b i l i t y a n d s t r a t e g i c p r o g r a m m e f l e x i b i l i t y o r i g i n a t i n gf r o m a c l e a r e r o r g a n i c s t r u c t u r e a n d a s t r o n g e r p r e s -e r v a t i o n o f t h e d e p a r t m e n t s c o r e c u l t u r e . I n o r d e rt o p r e se r v e a n a d e q u a t e f l e x i b i l i t y p o t e n t i a l w i t h i nR e s e a r c h D e p a r t m e n t Z , m a n a g e m e n t h a d s t a rt e dv a r i o u s s o c i a l e v e n t s t o c r e a t e a h i g h e r - o r d e r c o r ec u l t u r e. A l s o , a c a d e m i c s h a d t o s t ay i n t h e r es e a r c hd e p a r t m e n t a t le a s t 3 y e a r s i n o r d e r t o s t r e n g t h e ns o m e s h a r e d v a l u e s a n d a c o m m o n h i s to r y . Ina d d i t i o n , m a n a g e r s g a v e m o r e a t t e n t i o n t o t h e ir l e a d -e r s h i p s t y l e . T h e y p r o v i d e d m o r e d i r e c t i o n a n d f e e d -b a c k ( i n s t i t u t i o n a l l e a d e r s h i p ) . B y e m p h a s i z i n g ac o m m o n l y s h a re d m a n a g e m e n t a n d o r g an i z at i onp h i l o s o p h y , t h e d i s t i n c t i o n b e t w e e n t h e f o r m a l a n da c t u a l o r g a n i z a t i o n w a s r e d u c e d . T h i s o v e r l a p p i n g

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culture e nhanced the potential for flexibility, but alsocorrected opposing initiatives.

on c l u s i o n sIn this article we expl ored the flexibili ty optio n insituations of high environmental turbulence. Weargued that flexibility is a managerial as well as anorganization design task. These two dimensionsallowed us to construct a rich typology of organ-izational forms for coping with changing levels ofenvironmental turbulence. Furthermore, from thistypology different trajectories of transfor mation couldbe obtained.

Some likely trajectories were considered withexamples based on flexibility audits in Phil ips Sem-iconductors, the Dutch Postbank and the DutchNational Gas Corporation. At the moment, the FARmethod has been applied in several other large cor-porations in various industries, e.g. KLM RoyalAirlines, the Dutch PTT, Dutch Van Ommeren TankStorage and Ericsson.On the basis of these flexibil ity audits, we may con-clude that in reasonably stable environments inwhich firms attention is directed towards reducingthe level of environment al turbulence, a natural tra-jectory of routinization is most likely (the planningoption). Contrary to this evolutionary approach, inextremely turbulent envi ronments in wh ich firms are

confronted with unpredictable changes, a trajectoryof revitalization is more likely to be successful (theflexibility option).Of course, we have to realize that both trajectorieshave their pitfalls. The risk of a trajectory of rou-tinizati on is the transfo rmation of the firm into a rigidform as a result of strategic drift. The sur plus of oper-ational flexibility, consisting of sophisticatedroutines, creates inertia in the form of a very mech-anistic structure and a very narrowly focused culture.The growing resistance to deviant interpretations ofthe enviro nment reflects a tenden cy toward over-balance of the rigid form. On the other hand, therisk of a trajectory of revitalization is turning into achaotic for m as a result of strategic neglect . Thesurplus of structural and strategic flexibility leads tounfocused actions with disconstructive results. Thelack of administrative structures, sense of direction,shared beliefs and instituti onal leadership is charac-teristic of a tende ncy towards underbalanc e of thechaotic form. Our organizational typology thereforehighligh ts two sets of transiti on. First, to become suc-cessful in turbulent environments, an organizationhas to rise from a state of initial chaos or disor-ganization. Second, to remain successful, organ-izations have to manage a cyclical process whichrequires them to transform themselves from a plan-ned form into a flexible form, and then back from aflexible form into a pla nned form, to matc h theopportunities set by the changes in the level of tur-bulence over time.

eferences1 . H . M i n t z b e r g , S t r a t eg y f o r m a t i on : s c ho o l s o f t houg h t , I n J . W . F r ede r i c k s on ( Ed .) ,Perspect ives on St ra teg ic Managem ent pp . 107 - 208 , H a r pe r R ow , N ew Y o r k ( 1990) .2 . D . A . A ak e r and B . M as c a r enhas , T he need f o r s t r a t eg i c f l e x i b i l i ty , Jou rna l o f Bus inessS t r a tegy5 (2) , 74 -82 (1984) .3. H. I . An soff , Corporate Strategy M c G r aw - H i l l, N e w Y o r k ( 1965 ).4 . D . J . E pp i nk , P l ann i ng f o r s t r a t eg i c f l e x i b i l i t y , Long Range P lanning 11 (4) , 9-15 (1978) .5 . J . B . Quinn, Strateg ies for Change- -Logica l Incrementa l ism I r w i n , H om ew oo d , I L ( 1980) .6 . H . I. A ns o f f , T h e C h ang i ng S hape o f t he S t r a t eg i c P r ob l em , I n D . E. S c hende l and C . W .Hofer (Eds) , Strateg ic Mana gem ent : a New V iew of Bus iness Pol icy and P lanning pp . 30 - 44 ,

L i t t le , B r ow n C o . , B os t o n / T o r on t o ( 1978) .7 . T . D e Leeuw a nd H . W . V o l be r da , O n t he c onc ep t o f f l e x i b i l i t y : a dua l c on t r o l pe r s p ec t i v e ,Omega 24 (2), (1996).8 . P . S . A d l e r , M a nag i ng f l ex i b l e au t om a t i on , C a l if o r n ia M anagem en t R ev iew 30 (3), 34-5 61988 ) .9 . J . B. Q u i nn , M a nag i ng i nno v a t i on : c on t r o l l ed c haos , Harvard Business Re view 63 (3) , 78-84 (1985).

10. H. G. K r i j nen, The f l ex i b l e f i rm , Long Range P lanning 12 (2) , 63 -75 (1979) .11. K . R. Ha r r i gan, Strateg ic F lex ib i l it y Lex i ng t on B ook s , Lex i ng t on , M A ( 1985) .12 . B . M as c a r enh as , C op i ng w i t h unc e r t a i n t y i n i n t e r na t i ona l bus ines s , J o u r n a l o fIn ternat iona l Bus iness Stud ies 13 (2) , 87 -98 (1982) .13. T . Burns and G. M . S ta l ker , The Manageme n t o f I nnova t i on Tav i s tock , London (1961) .14 . P . B a t e , T he i m p ac t o f o r gan i z a t i ona l c u l t u r e on app r oac he s t o o r gan i z a t i ona l p r ob l e m -s o l v i ng , Organizat ion Studies 5 (1) , 43-66 (1984) .Building Flexible Organizations for Fast-moving Markets


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1 5. G . H o f s te d e , M o t i v a t i o n , l e a d e r s h i p a n d o r g a n i z a t i o n : d o A m e r i c a n t h e o r i e s a p p l ya b r o a d ? , Organizat iona l Dynamics 9 (1) , 42-63 (1980) .16 . G . J ohn s on , Strateg ic Change and the Ma nage me nt Process B as il B l ac k w e l l , O x f o r d(1987).1 7. H . W . V o l b e r d a , T o w a r d t h e f l e x i b l e f o r m : h o w t o r e m a i n v i ta l i n h y p e r c o m p e t i t iv ee n v i r o n m e n t s , Organizat ion Science 7 (4) , 359-374 (1996) .1 8. J . M . U t t e r b a c k a n d W . J . A b e r n a t h y , A d y n a m i c m o d e l o f p r o c e s s a n d p r o d u c t i n n o v a t i o n ,Omega 3 (6) , 639-656 (1975) .19 . D . M i l l e r and P . F r ies en , A r c he t y pes o f o r gan i z a t i ona l t r ans i t i on , Admin is t ra t ive Sc ienceQ uar te r l y25 (2) , 268-300 (1980) .20. R. M . Kanter , When Giants Learn to Dance: Mas ter ing the Chal lenge o f StrategyMa nage me nt and Careers in the 1990s S i m o n S c hus t e r , N ew Y o r k ( 1989) .21 . C . B aden - F u l l e r and J . M . S t op f o r d , Rejuvenat ing the M ature Business H ar v a r d B us i nes sSchool P ress , Bos ton, MA (1994) .22. I -t . W. Vo lbe rda , Organizat iona l F lex ib i l i ty : Change and Preserva t ion- -a F lex ib i l i t y Aud i tand Redesign Me thod W ol t e r s - N oo r dho f f , G r on i ngen ( 1992 ) .

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148 \page69 Blipping Flexible organizations forFast-moving MarketsHenk W Vulb~rdaOrganizational flexibility is seen as a strategic option when anticipation isimpossible and surprise is likely. Flexibility is a function of the interaction of twosets of variables. It is both a managerial and a~ organization design task. It has tobe concerned with creating or stimulating the organizationss control capacity. Todo this it needs to provide rapid response to changes that are familiar, to ensurethat management can adapt decision-making within a given structure and at thesame time to respond quickly when faced with unfamiliar changes that have far-reaching consequences. And the organizations supporting learning system has tobe able continually to adjust in tune with changes in its environment.

The organizations technology, structure and culture will, of course, affect itsresponsiveness. Increases in controllability can also involve changes inorganizational structure, Xerox, for example, was able to exploit its superiortechnological and market capabilities once it had fundamentally redesigned itsorganizational architecture. Other organizations such as GE, Philips and ABB havenot only restructured the organization but also tried to change the corporate culture.On the basis of the two central dimensions of organizational flexibility, four waysof addressing change can be identified. The rigid form is dominated by simpleroutines and the result is a fragile and vulnerable organization. The planned formhas a narrow flexibility mix and, if changes occur, the result can lead to inertia anda rigid organization. Where there is chaotic form the possibilities for variationsare unlimited but decisions are delayed even though the situation demandsimmediate action. The flexible form has a large and rich flexibility mix dominatedby strategic and structural flexibility. The balance between change and preservationis well managed. The process of transition from a chaotic to a flexible, planned andrigid form can be described as a trajectory of routinization moving from chaosthrough strategic focus to maturation which can lead to stagnation. It is possible tomove in the reverse direction, as is shown by the histories of IBM and Philips.The Flexibility Audit and Redesign FAR) method provides a useful means ofanalysing and assessing the need for the level of flexibility needed by anorganization to cope with changes in the environment. The FAR method usesquestions on orientation, need, discrepancy and the redesign required and has beentested in the different organizations in different changing environments. In onecase, that of an admin department of the Dutch National Postbank, the solution wasprofessional revitalization. At Philips Semiconductors, the result was a hybrid ofa planned/flexible form and the Dutch National Gas Company was able to enhancethe potential for flexibility.The trajectories do have pitfalls. However, to become successful in a turbulentenvironment, the organization needs to move from chaos. It then has to manage acyclical process from planned form to flexible form and back. This will enable it toexploit the opportunities which exist.

page 84 Green ~~~~~~ces: Blipping New Busyness withEnvironmental Groupslathe L Laotian and Edwin R StaffordMarket-based environmentalism MBE) has an objective to create market incentivesthat make ecology strategically attractive to businesses. As many firms do not haveenvironmental expertise, joining forces with environmental pressure groups can bea viable green strategy. For environmentalists, green alliances can be more effective

xecutive Summaries

Documents

Flexibility in Organisations, Volberda